pets-com-failure Failure: What Happened To In A Nutshell was an online seller of pet supplies founded by Greg McLemore and Eva Woodsmall during the dot-com bubble in 1998. In its first round of venture funding, secured a 54% stake in the company from Amazon CEO Jeff Bezos. After filing for bankruptcy in November 1999, the company became one of the shortest-lived public companies in history. represents all that was wrong with the business playbook of early internet companies: ambitious business plans, with aggressive assumptions, easy capital, and lack of reality checks, as early Internet companies went for grandiose plans, instead of gradually testing the market.

AspectExplanation was an American online pet supply retailer founded in 1998 during the dot-com boom. The company aimed to take advantage of the growing e-commerce industry by offering pet owners a convenient way to purchase pet products and supplies online. quickly gained attention for its memorable sock puppet mascot featured in its advertising campaigns.
High Profile IPOOne of the defining moments of was its initial public offering (IPO) in February 2000. The IPO generated significant media coverage and investor interest, reflecting the enthusiasm of the dot-com era. The company raised substantial funds through the IPO to fund its expansion and marketing efforts.
Aggressive invested heavily in marketing and advertising, including the prominent use of its sock puppet mascot in television commercials. While these marketing efforts created brand awareness, they also incurred substantial costs. The company’s high-profile advertising contributed to its public recognition but raised concerns about its ability to sustain such expenses.
Operational ChallengesDespite its marketing success, faced fundamental operational challenges. The company operated in a low-margin industry, and the cost of acquiring and shipping pet products was often higher than the prices at which they were sold. This resulted in significant losses, even with strong revenue growth. Additionally, struggled with inventory management and fulfillment logistics.
Dot-Com went public at the peak of the dot-com bubble in early 2000. However, as the bubble burst later that year, investor sentiment shifted dramatically. Many high-flying tech companies, including, saw their stock prices plummet. The burst of the dot-com bubble led to a more skeptical investment climate and a focus on profitability rather than growth at any cost.
Bankruptcy and LiquidationUnable to turn a profit and facing mounting losses, filed for bankruptcy in November 2000, just nine months after its IPO. The company’s stock price had fallen from its peak, and it struggled to secure additional funding. In the bankruptcy process, liquidated its assets, including its iconic sock puppet mascot. The company’s demise became a symbol of the excesses and failures of the dot-com bubble.’s rapid rise and spectacular fall remain one of the most iconic stories of the dot-com era. While the company itself did not survive, it left a lasting legacy in the business world as a cautionary tale of the dangers of pursuing aggressive growth strategies without a sustainable business model. The sock puppet also remains a memorable symbol of the dot-com bubble era.
Impact on E-commerceThe rise and fall of had a broader impact on the e-commerce industry. It prompted a shift in investor and consumer sentiment toward e-commerce companies, with a greater focus on profitability and sustainable business models. The experience contributed to a more cautious approach to valuing and investing in internet startups. Despite its failure, the e-commerce industry continued to grow and evolve, ultimately becoming an integral part of the global retail landscape.

Background was an online seller of pet supplies founded by Greg McLemore and Eva Woodsmall during the dot-com bubble in 1998.

In 1999, the site and domain were purchased by venture capitalist Hummer Winblad and eventual CEO Julie Wainwright – later the founder of luxury fashion site The RealReal. 

Wainwright was tasked with getting the company off the ground and she did so with spectacular effect. In its first round of venture funding, secured a 54% stake in the company from Amazon CEO Jeff Bezos. 

The company then raised $82.5 million in an IPO held in February 2000. The IPO followed an aggressive marketing campaign that saw advertisements placed during the Super Bowl and at Macy’s Thanksgiving Day Parade.

Initial sales were extremely promising, with the share price peaking at $14.

Just 268 days later, declared bankruptcy and in the process, became one of the highest-profile victims of the dot-com bubble.

Below we will discuss how a company with a valuable domain name, strong eCommerce affiliate, and clever branding failed so quickly.

Unsuitable business plan and excessive spending

During its short life, spent millions on advertising and marketing. From February to September 1999, the company spent more than $70 million (reference despite only taking in $619,000 in revenue.

Adding to its incredible expenses were the salaries and benefits for over 300 staff.

The lack of a suitable business plan was also apparent.

The company sold its pet products at a third of the price it paid to obtain them with the belief that huge discounts and free shipping would win it a large customer base overnight.

Shoe seller Zappos had successfully used the same strategy, but had not counted on the cost of shipping its products. Items such as dog food, cat litter, and pet crates were heavy or bulky and thus very expensive to post.

In an industry already characterized by slim profit margins, the company had no hope of turning a profit.

Poor understanding of target audience never planned to offer free shipping and deep discounts forever. Eventually, it wanted to move customers to high-profit margin purchases.

This move reflected a poor understanding of the target audience. In particular, the company failed to change pet food buying patterns because pets tend to react negatively to sudden changes in diet. also assumed that more people would buy pet supplies online in the first place. Without proper research, it failed to understand that the market for home-delivered pet food was unprofitable. 

Although this trend is more popular today, consumers in 1999 preferred to buy pet food in physical stores. This was partly for convenience, and partly because many simply didn’t know how to purchase something on the internet.

A lack of technology

To some extent, was ahead of its time in the eCommerce space. 

In 1999, there were no plug-and-play solutions for scalable eCommerce, warehouse management, or customer service. As a result, the company had to hire a team of over 40 engineers. 

Cloud computing was also many years away, so the company had to create a server farm and hire yet more staff to ensure the website did not go down. The lack of technology drove operating costs higher still.

Start-up culture

Many start-up companies of the era provided catered meals or fully stocked kitchens to their employees. Games, gym memberships, group outings, and parties were also routinely offered as incentives. management did not skimp on this culture, further hindering its ability to make a profit.

With excessive spending continuing in the face of an unprofitable business model, there was only one end for

Key takeaways:

  • was an American online pet food retailer founded by Greg McLemore and Eva Woodsmall during the dot-com era. After filing for bankruptcy in November 1999, the company became one of the shortest-lived public companies in history.
  • spent millions on marketing before bothering to verify whether there was a demand for its products. At the time, consumers preferred to purchase pet food in physical stores. 
  • was ahead of its time, to some extent. Its high operating costs were exacerbated by a lack of suitable eCommerce, customer management, and cloud technology, among other things.

Quick Timeline

  • was an online pet food retailer founded during the dot-com bubble in 1998.
  • The company secured a 54% stake from Amazon CEO Jeff Bezos in its first round of venture funding.
  • raised $82.5 million in an IPO in February 2000, following an aggressive marketing campaign.
  • The company spent millions on advertising and marketing, despite low revenue, leading to excessive spending.
  • had an unsuitable business plan with deep discounts and free shipping that led to unprofitable operations.
  • The company failed to understand its target audience and the market for home-delivered pet food.
  • A lack of suitable technology and high operating costs further hindered’s profitability.
  • The company’s start-up culture with excessive spending on perks added to its financial troubles.
  • filed for bankruptcy just 268 days after its IPO, becoming one of the high-profile victims of the dot-com bubble.

Other Failure Stories

What Happened to WeWork

WeWork is a commercial real estate company providing shared workspaces for tech start-ups and other enterprise services. It was founded by Adam Neumann and Miguel McKelvey in 2010. WeWork’s business model was built on complex arrangements between the company and its landlords. There were also several conflicts of interest between Neumann and WeWork, which provided the impetus for the failed IPO and significant devaluation that would follow.

What Happened to Netscape

Netscape – or Netscape Communications Corporation – was a computer services company best known for its web browser. The company was founded in 1994 by Marc Andreessen and James H. Clark as one of the internet’s first and most important start-ups. The Netscape Navigator web browser was released in 1995 and became the browser of choice for the users of the time. By November 1998, it had been acquired by AOL, which tried unsuccessfully to revive the popularity of the web browser. Ten years later, Netscape was shut down entirely.

What Happened to

Musically, or as it is officially known, was a Chinese social media platform headquartered in Shanghai. After passing 200 million users in May 2017, the platform was shut down by tech company ByteDance in November. After its acquisition, ByteDance suggested would continue to operate as a standalone platform. Company representatives noted that it would be able to leverage ByteDance’s AI technology and enormous reach in the Chinese market. Musically was ultimately absorbed into TikTok in June 2018, with the app no longer available in August of the same year. Existing users were offered technical support and several new features as a sweetener.

What Happened to Vine

Vine was an American video social networking platform with a focus on looping video clips of six seconds in length, founded by Dom Hofmann, Rus Yusupov, and Colin Kroll in 2012 to help people capture casual moments in their lives and share them with their friends. Vine went on to become a massively popular platform. Yet by 2016, Twitter discontinued the mobile app, allowing users to view or download content on the Vine website. It then announced a reconfigured app allowing creators to share content to a connected Twitter account only. This marked the end of Vine.

What Happened to CNN Plus

CNN Plus was a video streaming service and offshoot of CNN’s cable TV news network that was launched on March 29, 2022. The service was ultimately shut down just one month after it was launched. Trouble began for the platform when parent company WarnerMedia merged with Discovery. The latter was unimpressed with paltry viewer data and, with $55 billion in debt to clear, was not interested in funding CNN+ moving forward. Other contributing factors to CNN Plus’s demise include a lack of compelling content and streaming service market saturation.

What Happened to Clubhouse

Clubhouse is a social app that allows thousands of people to communicate with each other in audio chat rooms. At one point, the company was worth $4 billion and boasted users such as Mark Zuckerberg and Elon Musk. Clubhouse declined because it rode the wave of pandemic lockdowns and suffered when people resumed their normal routines. The decision to remove the invite-only feature also caused a rapid influx of new members and removed any exclusivity. Clubhouse management also failed to define a business model and was unaware of the components of a successful social media site.

What Happened to Facebook


What Happened To Carvana

Carvana is an American online used car retailer headquartered in Tempe, Arizona. The company – which sells cars in unique vending machines – was the fastest-growing used vehicle retailer in the United States, with revenue of $3.94 billion in 2019. Yet by 2022, on $12.8 billion in revenue, the company reported almost $2.9 billion in net losses.

What Happened To Houseparty

Houseparty was an app-based group video chat platform for mobile and desktop. Released in February 2016, the platform rapidly grew to hundreds of millions of users and was the #1 social app in 82 countries by May 2020. Less than 18 months later, however, owner Epic Games announced that it would be shutting down the app in October 2021. Let’s explain the reasons for Houseparty’s demise below.

What Happened To ChaCha

ChaCha was a human-guided search engine founded in 2006. The platform provided a valuable service at a time when traditional search engine algorithms were unreliable and less developed. When algorithms did become sufficiently developed, they provided answers to questions for free and much more rapidly than ChaCha could. The ChaCha business model was also unscalable, with employees overworked as the company tried to stay ahead of innovation. ChaCha’s demise was also compounded by the smartphone, which provided another avenue for consumers to find information. A belated attempt to restructure and cut costs followed, but the company could not service its debt past 2016.

What Happened To RadioShack

RadioShack is an American electronics retailer founded by brothers Milton and Theodore Deutschmann in 1921. The company enjoyed market dominance in the 70s and 80s but faded fast after a slew of missed opportunities. RadioShack operated over four thousand stores in the USA, but many were placed too close together which caused sales cannibalization. These stores were also often small and had a confusing inventory mix. RadioShack sold the first mass-produced personal computer with much success. However, the company saw no future in personal computers because of the high cost of hardware. It then instructed sales managers to intentionally keep PC sales under a certain threshold.

What Happened To Compaq

Compaq was an American developer and producer of computer products and services. After strong initial success, the company was acquired by HP in 2002 with the Compaq brand retired in 2013. Compaq’s short-sighted acquisition of DEC provided the catalyst for its decline. While the company was dealing with the ramifications of the acquisition, competitors such as Dell and Gateway increased their market share. Compaq also experienced a loss in revenue after the dot-com bubble burst. This was exacerbated by the standardization of chipsets and motherboards by Intel.

What Happened To Kodak

Kodak is an American photography product and service company founded in 1892 by George Eastman and Henry A. Strong. After dominating the photographic film industry for decades, the company filed for bankruptcy in 2012. Kodak was not ignorant of digital camera technology. But it did fail at various stages to commit to digital products entirely despite overwhelming evidence that the technology would prove profitable. Kodak was also the victim of the changing retail landscape and consumer sentiment toward foreign products in the United States. Blind in its devotion to printing, it also missed an opportunity to create a Facebook-style photo-sharing website three years before Facebook itself was conceived.

What Happened To Friendster

Friendster was a social networking site that then transitioned to a gaming platform. Ultimately, Friendster failed to capitalize on its early success as one of the first social media platforms to experience mass uptake. When Friendster became a gaming platform, it failed to notify its user base. This set in motion the migration of users to Facebook which would continue for some years. Friendster’s decision to raise funds via venture capital funding populated its board with investors who were not interested in technology or innovation. The company was acquired by MOL Global in 2009 who then sold its patents to Facebook soon after.

What Happened To StumbleUpon

xStumbleUpon was an early social network founded by Garrett Camp, Geoff Smith, Justin LaFrance, and Eric Boyd. At one point, the platform was responsible for half of all social media traffic in the United States. StumbleUpon suffered intense competition from the likes of Pinterest, Digg, and Reddit – both in terms of site functionality and monetization strategy. After a failed partnership with eBay, Camp bought back the company and instituted a major redesign to limited success. The StumbleUpon user experience became outdated as consumers preferred to waste time scrolling through news feeds. Upon this realization, Camp shut down the service in 2018 to focus on a more modern iteration called

What Happened To Altavista

Altavista was a pioneering search engine developed by a group of Digital Equipment (DEC) researchers. It was originally created to showcase the power of a then-revolutionary DEC supercomputer. After an ominous partnership with Yahoo in 1996, AltaVista underwent a series of acquisitions and format charges as several companies tried to make it profitable. In the process, the search engine lost market share to up-and-comer Google. Yahoo acquired AltaVista in 2003 and absorbed the technology behind the search engine into its own platform. AltaVista was formally put to rest ten years later.

What Happened To Blockbuster

Blockbuster was an American movie and video game rental chain. The company went from industry leader to filing for bankruptcy with $1 billion in debt in less than a decade. Blockbuster relied on late fees to drive a high proportion of revenue. This strategy proved uncompetitive after Netflix offered fee-free movie rentals by mail. Blockbuster lost significant market share to Netflix in the ensuing years and experienced a decline in profit after abolishing late fees in an attempt to remain competitive. Blockbuster’s demise is mostly due to an inability to innovate. Although passing on the offer to purchase Netflix is noteworthy, the company failed because of a myopic focus on its outdated rental franchise model.

What Happened To Napster

Napster was a peer-to-peer music-sharing software application. It was the first such platform to provide free access to the full history of recorded music online. Napster quickly attracted the attention of music artists, with Metallica instigating court proceedings against the company for copyright infringement and the distribution of unreleased music. Napster was forced to shut down after the Recording Industry Association of America won a court injunction. Mounting legal fees and compensation costs led to the company filing for bankruptcy in 2002.

What Happened To BlackBerry

BlackBerry is an iconic smartphone brand owned by Canadian company BlackBerry Limited. The company enjoyed first-mover status in the smartphone industry, but ultimately squandered its advantage. BlackBerry was ignorant and in some ways disrespectful of competitors in the industry. It was more concerned with protecting its proprietary technology than innovating to stay relevant. Though profitable to some extent, BlackBerry’s focus on enterprise customers came at the expense of the far more lucrative consumer market. Government opposition to censoring information also eroded one of the core strengths of the company’s smartphone.

Why Nokia Failed

Nokia is a Finnish telecommunications, consumer technology, and information technology company founded in 1865. It enjoyed 51% of the global market share for mobile phones in 1998. Nokia’s device-based hardware system was cumbersome and outdated, but the company persisted with it while competitors developed the software-based iOS and Android operating systems. By the time Nokia phones offered Android, the company had been left behind. Corporate mismanagement within Nokia was rife and culture suffered as a result. Internally and externally, the company failed to acknowledge its diminishing relevance and market share.

What Happened To Xerox

Xerox is an American corporation selling print and digital document products and services worldwide. The company failed to capitalize on revolutionary research performed at its PARC R&D center. Xerox was visited by Steve Jobs in 1979 who gained access to PARC in exchange for Xerox receiving shares in Apple. He then purchased the rights to a Xerox GUI and used it to produce the Apple Macintosh. Xerox released the Xerox Star personal computer in 1981 in a rare example of the company selling an innovative product commercially. However, the Star was prohibitively expensive, targeted the wrong market, and was a decade ahead of its time.

What Happened To Quibi

Quibi was an American short-form streaming service for smartphones. Unfortunate timing with the onset of the COVID-19 pandemic is at least partly responsible for the failure of the platform. Despite billions being invested in securing high-end talent and production studios, Quibi content was generally poor quality. In any case, there was no way for consumers to share or engage with the content they did enjoy. Quibi was not helped by its pricing strategy and the presence of established competitors offering more for less. It was also improperly and inadequately marketed.

About The Author

Scroll to Top